Globalization and the Inequality of Nations

Paul Krugman and Anthony Venables

No 1015, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper considers a model in which an imperfectly competitive manufacturing sector produces goods which are used both for final consumption and as intermediates. Intermediate usage creates cost and demand linkages between firms and a tendency for manufacturing agglomeration. How does globalization affect the location of manufacturing and the gains from trade? At high transport costs all countries have some manufacturing industry, but when transport costs fall below a critical value a core-periphery pattern forms spontaneously, and nations that find themselves in the periphery suffer a decline in real income. As transport costs continue to fall there comes a second stage of convergence in real incomes, in which the peripheral nations gain and the core nations may well lose.

Keywords: Agglomeration; Globalization; Integration (search for similar items in EconPapers)
JEL-codes: F1 F12 F15 R3 (search for similar items in EconPapers)
Date: 1994-09
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1015 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Globalization and the Inequality of Nations (1995)
Working Paper: Globalization and the Inequality of Nations (1995)
Working Paper: Globalization and the Inequality of Nations (1995)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1015

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1015

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().